Token Holder Buyout Disclosure

Your Rights & Options When a Buyout is Proposed

Version: 1.0
Last Updated: October 2025
Target Audience: Property Token Holders

Quick Summary

What's Happening?
An institutional investor has proposed to buy 100% ownership of your tokenized property. If you accept the buyout offer, you will exchange your property tokens for cash (USDC/USDT) at a premium above the original token price.

Your Options:

✅ Accept — Exchange your tokens for cash at the offered price
❌ Decline — Keep your tokens and continue as a token holder
⏳ Wait — You have 7-14 days to decide (deadline in your notification)

No Action Required?
If you don't respond by the deadline, you keep your tokens. The buyout only happens if you actively accept the offer.

What is a Buyout?

Definition

A buyout occurs when an institutional investor (like a real estate fund, family office, or investment firm) wants to purchase all the property tokens and take 100% ownership of the physical property.

Why Buyouts Happen

🏢 Portfolio Expansion — Adding the property to their real estate portfolio
💰 Undervalued Asset — They believe the property is worth more than the token price
🔄 Operational Control — They want full control over property management
📈 Appreciation Potential — They see strong growth opportunities
🏗️ Development Plans — They want to renovate or redevelop the property

How Buyouts Work

Step 1: Institution proposes buyout at a specific price per token
        ↓
Step 2: SecondaryDAO compliance officer reviews and approves
        ↓
Step 3: All token holders receive email notification
        ↓
Step 4: Token holders decide whether to accept (7-14 days)
        ↓
Step 5: Those who accept exchange tokens for USDC/USDT
        ↓
Step 6: If enough tokens collected (75%+), buyout completes
        ↓
Step 7: Institution takes ownership of property

Understanding the Buyout Offer

Reading Your Notification Email

When a buyout is proposed, you'll receive an email with the following information:

1. Property Details

Property name and address
Your current token holdings
Total property tokens outstanding

2. Buyout Price

Price per token (in USDC/USDT)
Your total payout (tokens × price)
Original token price (what you or previous holder paid)
Gain/Loss (difference between buyout price and original price)

3. Premium Information

Exit Premium % — Extra amount above base value
Why there's a premium — Compensates for early liquidation

4. Timeline

Proposal date — When buyout was initiated
Deadline — Last day to accept the offer
Days remaining — Countdown to deadline

5. Buyer Information

Institution name — Who is buying
Institution type — Fund, family office, corporation, etc.
KYC status — Verified by SecondaryDAO compliance

Example Buyout Offer

Property: Sunset Villa, Austin TX
Your Holdings: 50 tokens

─────────────────────────────────────────
BUYOUT OFFER DETAILS:

Price per Token:           $120.00 USDC
Your Token Holdings:       50 tokens
Your Total Payout:         $6,000.00 USDC

─────────────────────────────────────────
COMPARISON TO ORIGINAL PRICE:

Original Token Price:      $100.00
Buyout Price:              $120.00
Your Gain per Token:       $20.00 (20%)
Your Total Gain:           $1,000.00

─────────────────────────────────────────
PREMIUM BREAKDOWN:

Base Property Value:       $100.00/token
Exit Premium (20%):        $20.00/token
Total Buyout Price:        $120.00/token

─────────────────────────────────────────
DEADLINE:

Proposal Date:             January 15, 2025
Acceptance Deadline:       January 29, 2025
Days Remaining:            14 days

What is an "Exit Premium"?

The exit premium is an additional amount paid above the base property value to compensate you for:

Early Liquidation — You're selling earlier than expected
Opportunity Cost — You're giving up future rental income and appreciation
Market Premium — Similar to a "control premium" in traditional M&A

Typical Premium Range: 15–30% above base value
How It's Set:

Default premium: 20% (set when property launched)
Adjustable via token holder vote (67% approval required)
You can propose premium changes if you hold tokens

Your Rights as a Token Holder

1. Right to Accept or Decline

✅ You have the absolute right to:

Accept the buyout offer and sell your tokens
Decline the offer and keep your tokens
Change your mind before the deadline (if you haven't finalized)

❌ No one can force you to:

Sell your tokens
Accept a price you don't agree with
Make a decision immediately

2. Right to Full Information

You have the right to request:

Detailed buyer information (institution name, background)
Property valuation reports
Recent financial performance data
Comparison to recent token trades
Explanation of premium calculation

How to Request: Email [email protected] with subject "Buyout Information Request - [Property Name]"

3. Right to Fair Pricing

The buyout price must be:

Above Market Rate — Higher than the last token sale price
Include Premium — Exit premium (typically 20%) applied
Transparent — Clear breakdown of base value + premium
Compliant — Approved by SecondaryDAO compliance officer

4. Right to Equal Treatment

All token holders receive:

Same price per token
Same deadline
Same information
Same payment terms (USDC/USDT)

5. Right to Contest

If you believe the buyout offer is unfair, you can:

Request an independent property appraisal
Challenge the premium calculation
File a complaint with SecondaryDAO governance
Propose a higher exit premium (requires token holder vote)

Complaint Process: Email [email protected] within 3 days of notification

How to Accept the Buyout

Option 1: Accept via SecondaryDAO Dashboard (Recommended)

Step 1: Log into Dashboard

Visit: https://dashboard.secondarydao.com
Connect your wallet (MetaMask, WalletConnect, etc.)
Navigate to "My Properties"

Step 2: Review Buyout Details

Click on the property with active buyout
Review "Buyout Offer" section showing price, payout, deadline, and buyer information

Step 3: Accept Offer

Click "Accept Buyout Offer"

Review transaction details in the popup:

You will send:     50 tokens
You will receive:  $6,000 USDC
Gas fee estimate:  ~$15-30 (varies)

Click "Confirm" in your wallet
Wait for transaction confirmation (~30 seconds)

Step 4: Receive Payment

USDC/USDT automatically sent to your wallet
Email confirmation + transaction hash provided

Option 2: Accept via Smart Contract (Advanced Users)

// Using ethers.js
const buyoutContract = new ethers.Contract(buyoutAddress, buyoutABI, signer);

// Approve token spending first
const propertyTokenContract = new ethers.Contract(
  propertyTokenAddress,
  propertyTokenABI,
  signer
);

await propertyTokenContract.approve(
  buyoutAddress,
  ethers.utils.parseEther("50") // 50 tokens
);

// Accept buyout
const tx = await buyoutContract.approveBuyout(
  ethers.utils.parseEther("50") // Amount of tokens to sell
);

await tx.wait(); // Wait for confirmation

Contract Function:

function approveBuyout(uint256 tokenAmount) external

What Happens:

Your tokens transferred to buyout contract
Contract calculates your payout: tokenAmount × pricePerToken
USDC/USDT sent to your wallet
Transaction recorded on blockchain

Option 3: Partial Acceptance

✅ Yes, you can sell a portion of your tokens.

Example:

You hold: 100 tokens
You accept for: 60 tokens
You keep: 40 tokens

How to do it:

Dashboard: Enter the number of tokens in "Partial Acceptance"
Smart Contract: Set tokenAmount accordingly

Payment Process

When You Get Paid

Immediate Payment — As soon as your acceptance transaction confirms.

Payment Currency

USDC (USD Coin) — Preferred
USDT (Tether) — Accepted

1 USDC = 1 USDT = $1.00 USD

Converting to Fiat Currency

Coinbase (Easiest) — KYC → deposit USDC → sell → withdraw USD
Kraken/Gemini — Similar flow
OTC Desk (>$50k) — Email [email protected] for referrals

Tax Reporting

You will receive a 1099-B. SecondaryDAO reports sale details; you must report on your tax return. See Tax Considerations.

If You Decline the Buyout

What Happens If You Don't Accept?

You keep your tokens and continue as a token holder:

Receive monthly distributions
Vote on property decisions
Sell tokens on secondary markets (if available)
Participate in future offers

Changing Your Mind

Before Deadline: You can still accept
After Deadline: Offer expires (unless extended or reissued)

Minimum Threshold Outcome

If threshold not met (e.g., 75%): Buyout cancelled; tokens and funds returned
If met: Buyout completes; non-sellers become minority holders

Minority Token Holder Rights

You keep tokens; institution has majority control
Continue receiving proportional income
Options: keep, negotiate, wait for future buyout, or sell on secondary markets
Protections: cannot be forced to sell; governance oversight

Tax Considerations

Capital Gains Tax

Capital Gain = Sale Price - Cost Basis - Transaction Costs

Example:
Sale $6,000 – Cost $5,000 – Gas $25 = $975 gain → 20% = $195 tax (illustrative)

Tax Rates (2025)

Short-Term (<1 yr): Ordinary income (10–37%)
Long-Term (≥1 yr): 0%, 15%, or 20%

Holding Period Gain Tax Rate Tax Owed 6 months $1,000 24% $240 18 months $1,000 15% $150 3 years $1,000 15% $150

State Taxes

Some states add capital gains tax (e.g., CA up to 13.3%, NY up to 10.9%; FL/TX/NV 0%).

Stablecoin Considerations

Selling tokens for USDC = taxable event
Holding USDC = not taxable
Selling USDC for USD = usually $0 gain
Swapping USDC↔USDT = taxable event

Reporting & Loss Harvesting

Forms: 1099-B, 1099-MISC, Schedule D, Form 8949
Losses offset gains; up to $3,000 may offset ordinary income; carry forward excess

Consult a Tax Professional

Consider CPA/tax attorney/crypto tax software for individual guidance.

Frequently Asked Questions

Q: Is this buyout mandatory?
A: No. You can decline and keep your tokens.

Q: How long do I have to decide?
A: 7–14 days from proposal date (see email).

Q: Can the buyer force me to sell?
A: No. Voluntary only.

Q: What if I do nothing?
A: You keep your tokens.

Q: Can I negotiate a higher price?
A: Not individually; propose a higher premium via governance (67% approval).

Q: When do I receive payment?
A: Instantly upon acceptance; funds are escrowed beforehand.

Q: Do I need to pay gas fees?
A: Yes. Network gas applies.

Q: Can I accept from a different wallet?
A: No. Must accept from the wallet holding the tokens.

Q: Are transactions public?
A: Yes. On-chain amounts and addresses are visible.

Q: What happens to the physical property?
A: Institution takes deed and manages future strategy.

Q: Is this legal and compliant?
A: Yes. Operates under SEC Reg D, real estate transfer laws, and AML/KYC requirements.

Important Warnings

⚠️ Scam Protection

❌ Never share seed phrases or click unknown links
✅ Verify emails from @secondarydao.com
✅ Use the dashboard: https://dashboard.secondarydao.com
✅ Contact support if unsure

⚠️ Tax Implications

Accepting a buyout may trigger capital gains tax; plan accordingly.

⚠️ No Guaranteed Returns

Buyout prices are offers, not valuations. Do your own analysis.

⚠️ Minority Holder Risks

If you decline and buyout completes, you may face reduced voting power and liquidity.

⚠️ Smart Contract Risks

Audited and insured, but risks exist (bugs, congestion, wallet security).

Getting Help

SecondaryDAO Support

General: [email protected] | | Mon–Fri, 9 AM–6 PM EST
Technical: Discord #token-holder-support | https://docs.secondarydao.com/faq
Complaints/Disputes: [email protected] (include property name, wallet, issue)

Emergency Support (24/7 During Active Buyout)

Email: [email protected]

Additional Resources

Tax: CoinTracker, TokenTax, IRS virtual currency guidance
Wallet: MetaMask Support, WalletConnect
Legal: [email protected] for referrals

Checklist: Before You Accept

Financial Review

Understand buyout price and total payout
Estimate capital gain/loss and taxes
Compare to recent market trades
Consider future rental income foregone
Have enough ETH for gas

Tax Preparation

Consulted tax professional (recommended for large amounts)
Know short- vs long-term implications
Set aside 15–30% of gains (estimate)
Plan for USDC→USD conversion if needed

Technical Readiness

Logged into dashboard
See active buyout in properties
Wallet connected with correct balance
Reviewed transaction preview

Risk Understanding

Know acceptance is final
Considered accept vs keep
Understand minority-holder risks
Verified legitimacy (not a scam)

Decision

ACCEPT
DECLINE
WAIT (check deadline)

Document Control

Version Date Author Changes 1.0 October 2025 SecondaryDAO Investor Relations Initial release

Disclaimer: This disclosure is for informational purposes only and does not constitute financial, legal, or tax advice. Consult with qualified professionals before making investment decisions. SecondaryDAO is not responsible for your decision to accept or decline a buyout offer.

Token Holder Buyout Disclosure

Token Holder Buyout Disclosure

Your Rights & Options When a Buyout is Proposed

Quick Summary

Table of Contents

What is a Buyout?

Definition

Why Buyouts Happen

How Buyouts Work

Understanding the Buyout Offer

Reading Your Notification Email

1. Property Details

2. Buyout Price

3. Premium Information

4. Timeline

5. Buyer Information

Example Buyout Offer

What is an "Exit Premium"?

Your Rights as a Token Holder

1. Right to Accept or Decline

2. Right to Full Information

3. Right to Fair Pricing

4. Right to Equal Treatment

5. Right to Contest

How to Accept the Buyout

Option 1: Accept via SecondaryDAO Dashboard (Recommended)

Option 2: Accept via Smart Contract (Advanced Users)

Option 3: Partial Acceptance

Payment Process

When You Get Paid

Payment Currency

Converting to Fiat Currency

Tax Reporting

If You Decline the Buyout

What Happens If You Don't Accept?

Changing Your Mind

Minimum Threshold Outcome

Minority Token Holder Rights

Tax Considerations

Capital Gains Tax

Tax Rates (2025)

State Taxes

Stablecoin Considerations

Reporting & Loss Harvesting

Consult a Tax Professional

Frequently Asked Questions

Important Warnings

⚠️ Scam Protection

⚠️ Tax Implications

⚠️ No Guaranteed Returns

⚠️ Minority Holder Risks

⚠️ Smart Contract Risks

Getting Help

SecondaryDAO Support

Emergency Support (24/7 During Active Buyout)

Additional Resources

Checklist: Before You Accept

Financial Review

Tax Preparation

Technical Readiness

Risk Understanding

Decision

Document Control